Calgary — The first half of 2016 is likely to be the roughest yet as the economic downturn continues in Alberta. Today, ATB Financial is releasing its latest quarterly Economic Outlook for the province, providing insight into what may happen in the months ahead.
Capturing five primary economic indicators, the key results from ATB’s Alberta Economic Outlook are:
- Alberta’s economy contracted by about one per cent last year; a smaller contraction is likely in 2016, with modest growth possible by year’s end.
- The petroleum sector and related industries will continue to shed labour, pushing unemployment above seven per cent.
- Weak consumer demand will weigh on residential housing and retail activity, but should stabilize by mid-year.
- Net interprovincial migration is down and the province could see a net out-flow in one or more quarters in 2016.
- Oil prices have fallen below forecasted levels, and are not expected to recover until late 2016.
As Alberta’s economy remains closely tied to the price of energy resources—early 2016 holds little chance of a quick rebound. Despite this, at -0.5 per cent, real GDP is projected to shrink less in 2016 than it did in 2015.
“As we move into 2016, excess global supply from OPEC producers coupled with uncertainty in China, Europe and the Middle East will continue to weigh on oil prices,” said Todd Hirsch, ATB’s chief economist. “This will lead to even greater stress on the balance sheets of the province’s energy producers as they struggle to reduce costs.”
The ongoing slump in oil prices likely means more lay-offs in the oil patch. This will raise unemployment and make life tough for Albertans who rely on the energy sector for their livelihood.
“Our labour market will remain challenged, including the loss of some labour to other provinces. But hiring in other sectors will help to offset job losses, though in some cases, these will be lower-paying jobs,” said Hirsch.
There are some bright spots. Our province’s other major industries—agriculture, forestry and tourism—continue to perform well. The weak Canadian dollar encourages more tourism and helps Alberta’s exporters.